Reforms to Allow State to Make Cuts

By VIRGINIA ELLIS, FAYE FIORE and MARK GLADSTONE

Aug. 2, 1996 12 AM PT

TIMES STAFF WRITERS

SACRAMENTO —

As government leaders throughout California struggled Thursday to assess the impact of sweeping national welfare changes on their communities, state officials said the most immediate effect would probably be a sharp cut in benefits to 2.7 million poor parents and their children.

State health and welfare officials said once the landmark legislation redefining the way America cares for its poorest is signed by President Clinton, it will clear the way for them to implement an across-the-board 4.9% reduction in welfare benefits.

Officials were uncertain about the long-term effects of the reform package on California, which has more welfare recipients than any other state. A Clinton aide said the president is prepared to introduce legislation offering financial relief to California and other hard-hit areas.

While embracing much of the reform legislation in remarks to the nation, Clinton took exception to cuts that are most ominous for California and promised to work to remedy them legislatively.

“The president knows the country as a whole cannot succeed if California cannot succeed,” said Barry Toiv, White House deputy press secretary. “There is no question that if those areas are not fixed, they will have a significant impact on California.”

Gov. Pete Wilson said the federal package was an improvement over the current system, but was gravely concerned about the consequences some of its provisions may have on the finances of Los Angeles County, spokesman Sean Walsh said.

“Our worry is L.A. County,” Walsh said. “L.A. County is looking at a pretty big hole in its budget and some pretty big payments.”

Thousands of legal immigrants will become ineligible for federal benefits under the bill and would probably seek county general assistance relief as a result, Walsh said.

But in the short term, the federal reforms will allow the Wilson administration to take action it has long wanted to do--reduce the monthly cash benefits.

The monthly benefits of an average Los Angeles welfare family of three will go from $594 a month to $565. In counties where the cost of living is lower, the reductions for those receiving Aid to Families With Dependent Children will be greater--from $594 a month to $538.

Terri Parker, chief deputy director of the state Department of Finance, said if Clinton signs the sweeping legislation as expected in mid-August, it will take until October to put the cuts into effect.

The reductions had previously been approved by the Legislature but could not be implemented without federal assent, Parker said. The new federal legislation, designed to give states more flexibility over welfare programs, lifts that restriction.

Parker’s comments came as Wilson’s administration, state legislators and local officials scrambled to figure out their next steps. Most officials were trying to map out plans for implementing the package without even having a copy of the federal bill, which runs hundreds of pages.

“The devil is in the details and we haven’t even been able to see the details yet,” said Assemblyman Tom J. Bordonaro Jr. (R-Paso Robles), who unsuccessfully sponsored a welfare reform bill backed by Wilson this year.

Bordonaro’s bill called for flat grants with no increases for larger families. It would also have terminated benefits after two years for those deemed able to work and it would have paid benefits with vouchers instead of cash to teenage mothers. After passing the Assembly, it was killed in a Senate committee.

On Thursday, Wilson officials said the administration did not know how much, if any, of that bill it could salvage in light of the federal reforms. “We’re reviewing all of our options,” Wilson spokesman Walsh said.

The federal measure was approved by the House of Representatives on Wednesday after Clinton announced that, despite some misgivings, he would sign the bill. Late Thursday, the measure was approved by the Senate.

The legislation would eliminate a 61-year federal commitment to provide cash assistance to America’s most needy citizens. Instead, it limits the amount of assistance available to most poor people, requires the able-bodied who receive aid to go to work and gives the states vast new authority to operate welfare programs.

As Clinton’s announcement virtually assured the measure’s passage, it set the stage for a highly charged debate in Sacramento over welfare in California and sparked criticism from both Republican and Democratic camps.

Republican Wilson and U.S. Sen. Dianne Feinstein (D-Calif.) said they feared that the new law, while saving an estimated $55 billion in federal funds over six years, would be extremely costly to state and local governments.

“It is clear that with 32 million people, no state has as much to lose from welfare reform as does California,” Feinstein said. “And unfortunately, California loses and loses big for changing welfare as we know it today. And that’s wrong.”

One-third of the national savings from the bill comes from California, Feinstein said. The state must produce a 600% increase in child-care slots and place 166,000 adult welfare recipients in jobs next year to meet the new requirements, she said.

In the last two years, California added an average of 300,000 people to payrolls in nonfarm jobs, she said, making the demands of the bill seem an “impossible hurdle.”

“The real impact of this bill will land on real people who are too old and or too sick to care for themselves,” Feinstein said. “I cannot understand why the greatest democracy on Earth, the richest country on Earth, would throw these people into the streets and simply say, ‘You’re on your own.’ ”

In a prepared statement, Wilson said he was disappointed and blamed Clinton for blocking “comprehensive national reform.”

Wilson said the changes did not give the state the complete autonomy it needs to redesign welfare programs.

He said federal restrictions still will prevent California from reducing its contributions to the Aid for Aged, Blind and Disabled and estimated the cost of that restriction in California at $270 million.

State Sen. Mike Thompson (D-St. Helena) said counties cannot absorb the extra cost of caring for legal immigrants and that the burden will fall to the state.

“With 40% of all legal immigrants living in California, we are being asked to pay the price for the rest of the nation,” he said.

Fallback money is built into the federal bill to assist states in times of large population growth or economic emergencies. One administration aide said it is too early to predict the kind of financial disaster California officials anticipate.

“This is going to give L.A. County and California and the 49 other states more flexibility in designing their welfare programs. There is so much opportunity here that to start devising a dire scenario is a little premature,” said Michael Kharfen, spokesman for the U.S. Department of Health and Human Services.

In the state Legislature, Democrats and Republicans said an in-depth analysis of the measure was needed before they could take steps to revise California’s laws. Most legislators cautioned against moving too hastily.

But Sen. President Pro Tem Bill Lockyer, the Legislature’s most powerful Democrat, said the proposal goes too far and sketched out the ingredients Democrats feel are needed.

“We Democrats at the state and federal level must insist on things like job training, child care and transportation to and from work, so that the reform has a realistic chance to succeed,” he said.

Calling Republicans “unsympathetic toward poor kids,” he predicted that GOP legislators would use the federal plan to seek further cuts in aid programs, but added that Democrats would resist.

Bordonaro said he hoped Democrats would follow the lead of their president and “come to the table.”

“Now that we have reform . . . that will allow us to rewrite much of our welfare system,” he said. “I think it could be done [in August after the Legislature reconvenes], but I don’t know if there’s a willingness to seriously sit down and discuss these issues.”

The Legislature is scheduled to return Monday for the final weeks of its two-year session.

Ellis and Gladstone reported from Sacramento and Fiore from Washington.

(BEGIN TEXT OF INFOBOX / INFOGRAPHIC)

Comparing California

California pays a higher-than-average amount to its 2.7 million recipients of Aid to Families With Dependent Children--the biggest aid program.

* California’s percentage of nation’s total population: 12%

* The percentage of overall AFDC dollars that California receives: 27%

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MONTHLY AVERAGE, FAMILY OF 3

U.S. average for AFDC: $365

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5 HIGHEST